Dutch Firms Urged to Follow Global Social Norms in India

By Rahul Verma, OneWorld, 6 May 2004

NEW DELHI, May 6 (OneWorld)—Dutch companies working in India are
under fire for ignoring issues such as graft and religious bigotry in
violation of corporate social responsibility norms.

Companies are under increasing pressure from society to undertake
their social responsibility, says a new report -- ‘Corporate
Social Responsibility—Policy and practices of Dutch
companies.’ This is especially so if it concerns companies
with a business relation in a developing country, since these
companies are more confronted with corporate social responsibility
(CSR) issues, it says.

The report points out that most companies do not monitor if their
policy is being implemented. Hardly any company checks if
internationally-accepted norms on child labor and other human rights
are being followed by their sub-contracting units.

Dutch companies in India only very partially practice corporate
social responsibility, says the Dutch NGO, India Committee of the
Netherlands (ICN), which conducted the study released last
week. Most multinationals do have an official corporate policy or a
code of conduct on the issue, but hardly involve their Indian daughter
company in its development, it says.

Nongovernmental Organizations (NGOs) in the Netherlands have chalked
out a framework for CSR based on international treaties or guidelines
on issues such as human and workers' rights, environmental and
consumer protection, corruption and socio-economic development.

Under the framework, companies are expected to do whatever they
can to promote human rights in countries where they operate.

Companies are expected to ensure respect for national
sovereignty and local communities, not engage in or support the use of
forced labor, contribute to the abolition of child labor and ensure
occupational health and safety.

CSR can help improve labor conditions, fight child labor, create a
better environment, says ICN coordinator Gerard Oonk. If
Trans-National Companies, for example, raise their standards and
improve monitoring, especially in terms of social and environmental
demands with regard to sub-contractors, then this would mean a lot for
those in the informal or unorganized sector, Oonk holds.

The report does not mention the names of the companies surveyed,
saying that it is necessary to maintain anonymity for the firms to
co-operate. It zeroed in on 40 companies from 19
fields—including food and food processing, energy, information
technology, car-parts, fishery, tourism, spices, leather, ship
breaking and pharmaceuticals.

The report stresses on the need for foreign companies to disclose key
information to the Indian public about environmental, labor and human
right practices, especially since current trends are conferring
unprecedented rights to multinational corporations operating in
India.

The report says that companies are wary of taking a position against
the government on issues such as human right violations in
Gujarat—where at least 2000 people were killed in anti-Muslim
riots in 2002—because they believe that it may adversely affect
their business operations.

Corruption is another serious issue, the report stresses, pointing out
that a company can be prosecuted in the Netherlands for corrupt
practices followed abroad.

Most companies, both Dutch and Indian, acknowledge that corruption
is an obstacle to do business in India and that they have been
confronted with it some way or another, mostly at customs, it
says.

Several companies make a distinction between corruption and
facilitation payments, arguing that the latter should not be
seen as graft as it is a way of avoiding red tape.

There is similar ambivalence when it comes to trade
unions. Although all companies acknowledge the right of their
employees to organize, they seem less eager in the Indian context,
says the report.

It cites several reasons for this. A manager of a Dutch company says
that he tries to keep trade unions out of the daughter company in
India because he has been told they are corrupt. It says that only ten
percent of workers in the leather industry are unionized because most
employees are not educated.

Several Indian stakeholders mentioned that trade unions in India
are not fully independent and are closely affiliated to political
parties, it says.

On child labor, while all companies have banned the employment of
children, not every firm strictly enforces this when it comes to their
Indian suppliers.

Not all companies make it very clear to their suppliers that they
do not tolerate child labor, the report says.

The practice of non-discrimination with respect to workers is under
question when it comes to recruiting women or dalits, members of the
so-called lower castes.

Women are mainly employed in low qualified jobs in informal
labor. Several companies employ dalits, and say that they treat them
the same as other castes, but in practice they still have the lowest
jobs, it says.

The report recommends that mother companies ensure implementation of
CSR policy by a daughter company in different ways—such as
through sanctions, incentives, training, accountability and
involvement in policy development.

Oonk points out that efforts are on to involve Dutch companies in the
newly-set up, government-funded CSR Centers in The Netherlands.

We will also use the study to convince our government that
non-implementation of CSR standards is not an exception but rather the
rule and that, therefore, they have to push companies harder to
implement them, he says.